Delivery versus payment (DvP) links a securities transfer to its corresponding payment so that one leg is not completed without the other. Blockchain can provide one way to coordinate that exchange, but DvP is a settlement principle that predates blockchain—and using a distributed ledger does not automatically eliminate settlement risk.
What does delivery versus payment mean?
A securities sale has two legs: the seller delivers the security to the buyer, and the buyer pays the agreed funds to the seller. DvP makes the transfers conditional on one another. Its purpose is to mitigate principal risk—the risk that one party completes its transfer but does not receive the other party’s countervalue. In the intended outcome, both legs complete or neither does.
For example, if a seller transfers a tokenised bond before receiving payment and the payment fails, the seller may lose the bond without receiving the cash. If the buyer pays first and the bond does not arrive, the buyer faces the corresponding risk. DvP links the two obligations to avoid leaving either party exposed in that way.
DvP is not a blockchain invention. The Committee on Payment and Settlement Systems published a foundational analysis of DvP models and their implications for credit and liquidity risks on 9 September 1992: Delivery versus payment in securities settlement systems. The Bank for International Settlements later called DvP “the canonical example of the contingent performance of actions” in its 2025 report, The next-generation monetary and financial system.
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How can DvP work on a blockchain?
Tokenisation may represent the security, the payment asset, or both. The two tokens may be held on one shared ledger, or on separate ledgers or platforms. That distinction matters because the technical arrangement must link both transfers, not merely record them.
Both legs on the same ledger
If the security token and cash token are on the same ledger, a smart contract can validate the parties’ instructions and coordinate both transfers in one atomic operation. If validation succeeds, both transfers complete together; if it fails, neither completes. The BIS describes this as an instant and simultaneous transfer when validation succeeds in its overview of settlement systems.
Technical atomicity is not, by itself, proof that a transfer is legally final or that every relevant risk has been removed. Finality depends on the applicable system and legal arrangements as well as the technical process.
The legs on separate ledgers
When the security and payment tokens reside on separate platforms, those platforms must coordinate the exchange. Cross-ledger techniques can, for example, lock and release tokens under coordinated rules. The arrangement must ensure that the two legs remain linked despite operating in different systems. The BIS discussion cautions that cross-ledger arrangements may reintroduce principal risk; they should not be assumed to have the same properties as a single atomic operation on one ledger.
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A 2018 joint report by the Bank of Japan and the European Central Bank, Project Stella: Distributed Ledger Technology in Payment, Clearing and Settlement, examined distributed-ledger applications as proof-of-concept research. It is not evidence that a particular design is currently deployed commercially.
What are the three DvP models?
The traditional taxonomy distinguishes models by whether securities and payment obligations settle individually or on a net basis, and by how the payment leg is handled. The model number does not change the basic meaning of DvP: the delivery and payment legs are linked.
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| Model | Securities leg | Payment leg | Settlement pattern |
|---|---|---|---|
| Model 1 | Each trade settles individually, gross. | Each trade settles individually, gross. | Both legs settle gross for each trade. |
| Model 2 | Deliveries settle individually, gross, through the processing cycle. | The resulting net payment obligation settles at the end of the cycle; the BIS account describes a payment guarantee as part of the linkage. | Gross securities delivery with end-of-cycle net payment. |
| Model 3 | Obligations settle on a net basis. | Obligations settle on a net basis. | Both legs settle net. |
These are settlement-process distinctions, not different definitions of DvP. The original CPSS report sets out the models and discusses their implications for credit and liquidity risk: Delivery versus payment in securities settlement systems.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Does blockchain make settlement risk disappear?
No. Effective DvP is designed to address principal risk by linking delivery and payment. Whether it does so depends on how the arrangement enforces that linkage and when each leg becomes final. A shared-ledger atomic transfer can coordinate the token movements, but technical completion alone does not establish legal finality. Separate-ledger designs require coordination across platforms and can leave principal-risk exposure if the legs are not reliably linked.
Blockchain is therefore a possible technical setting for DvP, not a synonym for DvP and not a blanket guarantee of risk-free settlement. The BIS discusses potential benefits of tokenisation in its 2025 report, but those benefits are possibilities, not guaranteed outcomes.
What to check when comparing a DvP design
- Ledger topology: Are the security and payment legs on one ledger, or must separate platforms coordinate?
- What is tokenised: Is the security represented as a token, the payment asset, or both?
- Settlement basis: Are obligations settled individually on a gross basis, netted, or handled through a combination such as DvP Model 2?
- Linkage and finality: What rules ensure that neither leg completes alone, and when are the transfers considered final under the relevant legal and system arrangements?
- Residual exposure: Does cross-platform coordination create a period or failure case in which one party could transfer value without receiving the other leg?
In the United States, the Federal Reserve’s regulatory definition describes DvP as the simultaneous exchange of securities and funds: 12 CFR § 234.3. That is a US regulatory text, not a universal legal rule for every jurisdiction or settlement system.
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